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If you've vested some of your options and don't want to stick around, but there's a good chance there will be a liquidity event at some point in the future.
by rdouble 13y ago
If you've vested some of your options and don't want to stick around, but there's a good chance there will be a liquidity event at some point in the future.
- saalweachter 13y agoTo clarify: most stock options evaporate if you leave the company. Usually you have 30 or 90 days to exercise them or lose them after you quit or are fired. Companies like this aspect. Stock is yours forever. The other reason to exercise early is also taxes. When you exercise the option, buy stock at $0.01, and sell it at $10 milliseconds later, that is a short term capital gain. If you exercise them years before selling them, you have long term capital gains, which are taxed at a lower rate. You increase your after-tax payout by (say) 10%, with the risk that your payout will be $0. Or less than the cost to exercise your shares. Or the opportunity cost (you can't use money tied up in illiquid startup stock to buy houses or APPL at $10) is too high.